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tv   Nightly Business Report  PBS  February 28, 2012 6:30pm-7:00pm PST

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captioning sponsored by wpbt >> tom: 13,000. finally, after days of trying, the dow jones industrials break through a key level. can it stay there? >> susie: also rallying today: gold. prices of the yellow metal are outshining platinum. >> i think we are going to see $2,000 gold this year. i think you'll see platinum and gold trade pretty close in price. >> susie: and when it comes to the economy, campaign promises versus political reality. it's "nightly business report" for tuesday, february 28. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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>> tom: good evening, and thanks for joining us. 13,000 is finally back. after trying for days, the dow did it, susie, closing above that number. >> susie: tom, it's the first time the blue-chip average has been above 13,000 in nearly four years. behind today's move: a report that consumer confidence is at its highest point in a year, and a sharp drop in oil prices. the dow gained 23 points to close at 13,005; the s&p 500 was up 4.5 points, closing at its higher level since june 2008; and the nasdaq added more than 20 points.
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>> tom: for the nasdaq, that's its highest level in more than 11 years. speculation about the launch of a new apple ipad helped those gains. the tech giant invited journalists today to a march 7th event in san francisco. the invitation shows a finger touching an ipad and says, "we have something you really have to see... and touch." apple shares rallied to a new high of $535.41 a share. apple now has a market value of a half trillion dollars. >> susie: joining us now with more analysis about today's market action: alec young, global market strategist at s&p capital i.q. important is the milestone. i know you're with s&p, but looking at the dow, is this milestone important? >> the major milestones with the dow or s&p are always encouraging to investors. on the outside, given the
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roller coaster ride the investors had to endure over the years, it's a positive from a psychological point of view. what we're really focused on with the s&p cap is what are the driver tac got us to this point, and can they continue. >> susie: one of the things interesting also about this cross to 13,000 is is happened without the individual investor. in fact, most of the individual investors have been pouring their money into bonds, and avoiding stocks. do you think that's going to change, especially now that we see all the headlines about dow 13,000? >> well, certainly, i think the reason the public is still very reticent about the stock market is you can't blame them. there's been unprecedented volatility in 2008, and then again last year. so i think it's a normal reaction to tough times in the market, and i think the key to changing that psychology is consistently better performance. and i k now 13,000 and a step in that direction, but i think
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it's likely to take time. >> susie: and tom mentioned about apple and its new highs, and what that has done to the nasdaq. do you think there's any impact as the new highs of apple have on investor confidence? >> absolutely. i mean, apcell now the world's biggest company. the nads dak i nasdaq is up 14%. and so certainly there's a lot of excitement around a new growth opportunities in technology and apcell certainly carrying the mantel as the poster child for the trend. at the margin, it doesn't hurt to have a high profile company that a lot of consumers and investors are familiar with doing extremely l. soox*usz look beyond the united states. we've seen the united states. they were up this year. do you think the european financial crisis is a little bit more in control, and making progress, or are there
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going to be more bad news to impact the american markets? >> i think we're through the eye of the storm. that's not to say we can't have more europe related volatility. but relative to the roller coast every ride last year where every asset class was trading on the headline out of europe, the ecb pumping into the european banks has gone a long way to reducing sovereign stress. we think we're through the worst of that in terms of impact on u.s. equities. but that's not to say on a shoertd term basis on any day we couldn't have a european related sell-off. relateed to last year, we think we're in the right direction. >> susie: what's the next day for the market? a leg up higher or a pullback? >> we think a pullback is probably the most likely. we've had a good run, but they've run from cheaper
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around christmas to fair value at this point, and a lot of positives factored in, including stableation in europe and more stable trends out of china. so i think at this point, the best thing would be to see a little bit of profit taking. and we see that, we'd be recommending investors buy into the gip dip. we think there's more room to run to year end. >> susie: thank you for coming on tonight. >> my pleasure. >> susie: we've been talking with alec young, global equity strategist at s&p capital i.q. >> reporter: still ahead, i'm erika miller in new york. gold is now trading at a higher price than platinum. i'll tell you what that means for the economy. >> tom: from lower taxes to cheaper gasoline, we've all heard these promises from presidential candidates before. if you think candidates will promise anything to get elected, you probably have lots of company. but the research shows you are wrong. campaign promises matter, and politicians try to keep their word. darren gersh tonight on how much stock you should put in the
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promises you're hearing this election year. >> reporter: when you hear a campaign promise this year, you're really hearing a fight being settled. on one side, there are the campaign policy guys, and they want the candidate to do the right thing. they live for wonky details. on the other side are the political people, and they want their guy to win. doug holtz-eakin was an economic advisor to john mccain, and he's seen it happen. >> the political people want flexibility. and when you write down details, you take away flexibility and you probably anger some constituency. so the political people are saying "we want to promise a tax reform, but not put one out." >> reporter: mitt romney was pretty detailed last week when he promised to cut individual income tax rates by 20%. and if he wins, it's an excellent bet his first budget will call for a 20% cut. political scientist jonathan bernstein says researchers have found campaign promises really do matter. >> politicians try to keep their promises; they don't always succeed. circumstances sometimes change.
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but whether it is members of the house, the senate or presidents, they really do take what they say in the campaigns seriously. ( applause ) >> reporter: but holtz-eakin compares election-year promises to music. he says singers often tweak songs, trying out different versions. >> and those are all fascinating because you understand why they were demos and this is the one that is the big hit. think of all that campaign stuff as demos. it's the first time out, and its not what we are going to pass through a congress, but it's what you want to try to do. >> reporter: before he retired from congress, bill frenzel survived more than a dozen campaigns. he says politicians may get grief for making promises they may not keep, but sometimes voters demand them. >> and if they want a tax cut, they will cheer when a politician offers them one. or if the politician says, "i will protect your entitlement to my dying day," and they like their entitlements, they'll be with that politician. but they have to understand that those are unlikely. >> reporter: hedge funds and
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professional investors actually pay a fair amount of attention to campaign promises, but they don't sweat the details. instead, they're looking for a general sense of what the candidate will do once the race is won. darren gersh, "nightly business report," washington. >> tom: the race for the republican presidential nomination goes through arizona and michigan today. willis sparks is an analyst at eurasia group, focusing on u.s. politics. >> nice to see you tonight. >> thank you for inviting me. >> tom: i want to ask you about some of the pledges we've heard on the campaign trail when it comes to economy. what about the importance of the economy playing in the primaries tonight in arizona and michigan? >> obviously, the economy is always the most important issue in just about any presidential election. particularly given the depth and breadth of this recession. everyone came into this race expecting it would be even more true this career. but you led your show with a story of rising consumer confidence and risings markets. what we're seeing is republicans trying to pivot back to the economy where they
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think they have promising political group to make up on barack obama. but some of the promises are more designed to draw attention to them in a moment of a close race than to set policy marks. >> tom: will some of the markers and pledges we've heard leading up toented to's election primaries, governor romney, and senator santorum talking about economic growth, and newt gingrich talking about energy saying if he's elected $2.50 gasoline isn't far behind. which gains traction? >> the dmroox*en issue is going to draw skepticism. we've heard these pledges before from candidates in both parties. i think voters have become sophisticated how little impact a government may have to gasoline prices n. terms of specific promises, the larger messages that romney and
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santorum are trying to convey. romney suggests santorum doesn't know how markets work or how to creted jobs. mr. santorum is saying romney is a republican in name only, and wants to increase taxes on the highest income group. this is not a conservative principle. and i think it's the sort of larger messages resonating with the electorate this year more than the policy detail. >> tom: that larger picture is the economy. but let's drill down to energy. in the last week it really has become the campaign issue, not only for republicans but president obama also made it an issue lfrd. could specifically energy overtake the broad economy as the political issue? >> if we get down to talking about gasoline prices it very well could. that certainly is a pocketbook issue. everybody knows how much it takes out of the wallet to put gas in the car. it may be a little much to suggest as mr. santorum did that it was the cause the the market meltdown in 2008.
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when we see gas prices reach a certain level, the president will have to deal with it, and the republicans will do everything they can to take advantage of it. >> tom: we'll see if we get $4 gloox*ern before super tuesday. willis sparks along with us. with the urasia group. expensive to mine than gold, so >> susie: gold is now outshining platinum. prices for the yellow metal have surpassed those of platinum, something that is historically
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unusual. erika miller takes a closer look at what's behind this switch and what it says about the outlook for the economy. >> reporter: platinum is often called "the rich man's gold" and "the most precious of precious metals." platinum is more rare and more expensive to mine than gold, so it normally trades at a higher price to its neighbor on the periodic table. but starting last september, that relationship turned upside down. analysts say the reversal reflects gold's growing investment appeal. >> that has lifted the overall demand for gold specifically as an investment, but also as a reserve asset for central banks and governments. and that, i think, finally culminated in, at last, the switch from gold trading at a discount, to platinum, to gold trading at a premium. >> reporter: the fact that gold is delivering shinier returns than platinum may be a negative economic omen. though both are used in jewelry, platinum has more industrial uses. in fact, about half of the world's platinum is used for catalytic converters, the part
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of the car that removes pollutants from exhaust. >> platinum is basically a consumable material, so it's supply and demand that really drives the need for platinum, whereas gold is used as more of a hedging instrument. >> reporter: many analysts think gold will continue to hold the upper hand. a recent survey of metals forecasters predicts gold will average $1,766 an ounce this year versus $1,624 for platinum. part of the reason some analysts are more bullish on gold is ease of investment, thanks to the growing number of gold exchange traded funds. >> it has been very, very important. it made gold available as an accessible investment to a whole new universe of investors who hadn't considered gold any way at all previously. >> reporter: so what would it take for platinum to regain its edge over gold? one possibility is a disruption of supplies. another is a big surge in vehicle production. erika miller, "nightly business report."
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>> tom: after flirting with 13,000 for a week, the dow finally closed above that level. all three major indices are at multi-year highs. here is tonight's "market focus." if it weren't for some afternoon buying, the dow industrials may not have been able to finish above 13,000. the dow dipped into negative territory early this afternoon before climbing back above 13,000. it made for some choppy trading in a narrow range. two of the dow's technology stocks led the gainers. microsoft and intel each added more than 1%. health care giant johnson and johnson also added more than 1%. and those gains were mirrored in the leading sectors. tech, consumer discretionary and health care sectors were the strongest, but all were up less
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than 1%. tech stocks got a jolt from a deal in the semiconductor business involving two of the biggest names in chips. intel is selling its stake in two manufacturing plants to micron, which was a partner in the plants. the deal totals $600 million and has micron supplying flash memory chips to intel. demand for those chips is growing as they're used in thumb drives, smartphones and even replacing hard drives in some laptops. micron was the hottest tech stock in the s&p 500 with its almost 4% gain. volume almost tripled. shares are at their highest price since june. analysts say the deal gives micron more capacity to make chips with higher profit margins. market sentiment may have been helped out by a drop in oil prices. crude oil fell about $2 per barrel, settling at $106.50. oil began this month just below $100 and is up 7% since february 1.
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we have a technical look at the oil rally under the blogs tab on our web site,, and the analysis calls for prices to continue climb. for-profit education stocks were under significant pressure today. career education fell almost 19%. it saw fewer new students sign up last quarter, contributing to worries about growth. apollo group shed 16%. apollo cut its forecast for new students, pointing to an improving job market and more competition. bridgepoint ed fell almost 8%. office depot has had a tough four years. finally, silver. earlier, erika reported on how unusual it is for gold to be higher priced than platinum. we saw silver stage a decent rally today. silver prices jumped 4.5%, settling at a five-month high. silver is the best performing precious metal this year, up more than 30%. that's tonight's "market focus." one of the trends we've seen
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lately is companies breaking themselves into pieces. kraft, conoco phillips and mcgraw hill are among them. we spoke with mcgraw hill c.e.o. terry mcgraw about the growth potential for his education and financial businesses. >> what we're seeing is as banks are limited in terms of some of their funding for private sector investment, and getting capital to the private sector. what's taking over in the bond market. right now in terms of lending in the united states, 50% of the capital raised is coming from bankss and about 50% is coming from the bond market. >> right now in europe, 80% of the capital raised is coming out of banks. 20% out of bond markets. that will shift dramatically. and as that 20% becomes 30 and 40%, dpaen, we will benefit from that. >> tom: what about the dodd trafrng reform act that which ban trading with their own
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money. could that impact business in the u.s. >> not really. i think what we have to see is some amendment to that, and actually, tom, this is a great point. what we're seeing literally around the world is individual countries coming up with some regularulation in the financial markets and for credit rating as l and there's tremendous uneasiness. >> we see regulatory coherence. i'd like to use the word harmonization, but start with coherence. we need to see a leveler playing field. we're not against regulation, but we need smart regulation. and what we need to say away from is those thing that is hurt the market and create unintended consequences. >> tom: on the education side of the business, i know you're working with closely with apple and the ipad initiative. what is the growth potential for textbooks delivered
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electronically. >> huge. the digital transportation of education is the opportunity of the century. what we've done is we've got about 20 professional titles for the ipad, and 50 now in the higher education space. this project is focused on high schools, and we're failing our kids in america and in our k 12 space. you have to do a lot of things differently, and the use of the ipad and interactive content that you can put on this will open doors. >> tom: one of the challenges is technology, and geting it in the hands of the students. how do you address that when you have got so many layers of regulations? local, state and federal rules. >> we have to get creative
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about the funding obviously. but if you've got an ipad, and what we're seing with certain high schools is they're giving a student an ipad at the beginning of the semester, and take it back at the end of the semester, and you'll get a life of three or four years on that ipad. so breaking it down over time, you're going to be able to be creative about the issues. we have more on the website, and including how he thinks america needs to get what he calls economic swagger back. >> susie: paltry interest rates have made dividend paying stocks one of the hottest investing ideas of the past year. tonight's commentator says the president's budget plan, which raises taxes on those dividends, is in need of reform.
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here's todd buchholz, author of "rush: why you need and love the rat race." >> does president obama have a grudge against stocks and dividends? in his last financial disclosure, he unveiled financial assets worth somewhere between $2.8 million and $11.8 million. what did he do with his money? he invested only 10% in stocks. meanwhile, he's keeping up to half a million dollars in a bank checking account. that's a lot of cash. don't we taxpayers pay for his dinners at the white house? is he buying new tires for air force one? did his bank give him a new toaster in exchange for opening an account? i'm more concerned, though, about the president's gripe against dividends. his latest budget argues for a top tax rate of 43.4% on dividends, almost three times today's rate. his timing is terrible; just as baby boomers are heading to retirement, their advisors are telling them to dump stocks and replace them with a steady flow of income from bonds.
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what happens when the stock- dumping begins? all the president's men and women and their the fannies and freddies won't be able to put things back together again. instead, we should be cutting dividend tax rates so that boomers hold onto their shares. dividends are not a dirty word; they are a reward for waiting and for trusting in the american dream. i'm todd buchholz. >> tom: with one of the worlds fastest-growing economies, china figures to be nike's playground over the next few years. the sports apparel giant hopes to sell $4 billion worth of shoes, clothes and sports gear there by 2015. but in tonight's "beyond the scoreboard," rick horrow says to do so nike will have to beat china's lax trademark laws. >> registering for a trademark in china is relatively cheap and easy, and favors those who register first, regardless of their intention to use it. this has created headaches for nike, which currently is fighting battles on behalf of two of its highest-profile
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endorsers, michael jordan and jeremy lin. this isn't just fun and games; millions of dollars are at stake, as is shareholder value. qiaodan sports claims to own the exclusive right to jordan's chinese name and sells branded merchandise in 5,700 chinese stores. the company posted $270 million in revenue in the first half of last year. meanwhile, wuxi risheng sports utility registered lin's name as a trademark in july 2010, a year-and-a-half before he burst onto the scene with the knicks. risheng paid $700 for the trademark, and could sell it back to lin and nike for millions of dollars. china allows this trademark squatting to happen. unless and until the system is overhauled, athletes will continue to have difficulty controlling their image and companies and their shareholders will lose. given the country's burgeoning economy, this could be a huge missed opportunity for retailers and investors. i'm rick horrow. >> susie: here's what we're watching for tomorrow.
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from costco to staples, several retailers are posting earnings. microsoft counts to eight as it takes the wraps off windows 8, the latest version of its iconic operating system. and in washington, federal reserve chairman ben bernanke kicks off his semiannual testimony to congress on the state of the u.s. economy. and finally tonight, with the dow crossing the 13,000 mark again, it got us thinking about the first time that happened. it was all the way back in 2007-- april 25 to be exact-- and it only took 159 days for the blue-chip average to go from 12,000 to 13,000. amazingly, 14,000 came just three months later in july 2007. and, by the way, tom, the first time the dow crossed 13,000, the nation's unemployment rate was at 4.5% and "the sopranos" was the top-rated show on cable. >> tom: the way we were in 200
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zen, susie much >> susie: let's hope we get to 14,000 fast. >> tom: how about it. >> susie: and a low unemployment rate. that's "nightly business report" for tuesday, february 28. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night, susie. i'm tom hudson. good night, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: captioning sponsored by wpbt captioned by media access group at wgbh 
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